Real Estate Information Archive

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Much of the country is looking at one more very big bite of winter before spring officially begins, but for the residential real estate market, spring is already underway—and new home buyers are sprouting everywhere.

Job creation so far this year is 30% stronger than in the same period last year. Unemployment is close to a low of more than nine years. Wages and income are also starting to pick up to growth levels we haven’t seen since 2009.

And with more money in their bank accounts, consumers are feeling a boost in confidence that leads to big purchases … like homes! This year’s economic growth gives them another reason to buy sooner rather than later because stronger economic growth also means higher interest rates.

January and February saw rates in line with what we saw at the end of 2016. But in the last two weeks, we’ve seen the average rate for a 30-year conforming mortgage increase by almost a quarter of a point. That’s because the market is expecting the Federal Reserve to raise short-term rates when the board of governors meets this week.

Mortgage rates will likely stay close to this level until we hear more about additional rate increases later this year. The expectation is for three increases this year. If economic data continue to show growth in inflation and wages, those three increases could actually become four.

This means that rates will continue to rise—we’re more likely to see a movement of 10-25 basis points in one- to two-week spurts, as new data and new comments from the Fed indicate rate policy changes are imminent. Those spurts will likely be followed by weeks with little change in rates.

The upside of higher rates is that it is getting easier to get a mortgage. The most widely followed measure of mortgage credit access from the Mortgage Bankers Association indicates that access has expanded 6.5% since September.

Arguably the biggest challenge to buyers this spring will be simply finding a home to buy and getting it successfully under contract. That’s because the supply of homes for sale is at an all-time low, and yet demand is strong and getting stronger.

We started the year with the lowest inventory of homes available for sale that we’ve ever seen on realtor.com. While we did see inventory grow 2% in February, total inventory was down 11% over last year.

Low inventory and strong supply are leading to inventory moving faster and faster as measured by median days on market. The median number of days on market in February was 90 days, six days less than last year. We also saw 27% of all listings selling in less than 30 days. Last year, we saw that happen in mid- to late March, so this year’s timetable is about three weeks ahead.

The early birds who decided to buy in the winter faced less competition and enjoyed lower rates than we are seeing now. It gets more expensive and more competitive going forward, but the early(ish) buyer, at this point, is still likely to come out on top, when you consider that prices and rates are likely to be much higher later in the year.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

Dec. 14 is the date credit markets most anticipate. By 2:00 pm ET on Dec. 14, we’ll know if the Federal Reserve will raise the federal funds rate 25 basis points like it did on Dec. 16, 2015.

At this point, does it really matter?

We’re beginning to think not. Yields and interest rates have run higher over the past month. Last year at this time, we saw a similar run. Mortgage rates trended higher through much of Oct. 2015, but then they plateaued by early November. By Dec. 2015, they were already trending lower, and they continued to trend mostly lower until early September.

You’ve likely heard the radio commercials: Lock in your mortgage rate now because the Fed is expected to raise interest rates in December. These commercials aren’t wrong; the Fed is expected to raise interest rates in December. The question is, is the impending interest-rate hike already priced into mortgage rates? We suspect that it is. Mortgage rates have already shown signs of plateauing (and even rolling over a bit) in the past week.

If we take past as prologue (and that’s not always a good idea), an argument can be forwarded that mortgage rates are unlikely to rise much higher. If we were to bet (again, not always a good idea), we would bet that mortgage rates won’t rise much higher, but neither will they fall much either. A tight range, like the one maintained though August, could very well hold through the election.

Of course, that could all change after the election, so locking in a decent rate today wouldn’t be the worse decision a borrower could make.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

After such a strong surge in September, a little slippage should be expected.

Home builder sentiment slipped slightly, posting at 63 on the Wells Fargo/NAHB’s Sentiment Index for October. This was a two-point slip compared to the September reading of 65. That said, the September reading was a five-point surge over the August reading. Builders remain overwhelmingly optimistic. And they’re even more optimistic about future home sales: the future sales component of the index rose a point to post at 72.

Sentiment correlates positively with action. The action is still good, though the headline reading was misleading.

New-home starts fell 9% to a 1.047 million units on annualized rate in September. The headline number would appear to temper optimism. But when we look closer, we find that the drop is entirely related to the volatile multi-family component, where starts fell 38%. The good news is that the larger, more important single-family component was up a strong 8.1% to 783,000 units for the month.

Now that a growing cadre of younger buyers is finally taking to homeownership, home builder sentiment and activity should remain elevated as we head into 2017.

It’s always nice to have a report corroborated by other sources. Last week, we reported on the increase in millennial interest in homeownership. This week Realtor.com reports that first-timers (mostly the young) will compose 52% of prospective home buyers in 2017. Last year, the same survey found that only 33% of prospective buyers were young first-time buyers. In addition, Zillow compiled a survey of 13,000 respondents and found that half were under age 36. These younger buyers accounted for 47% of all purchases.

Of course, this is all good news for housing, both new and existing. It’s also good news for the economy at large. Housing activity – construction, sales, materials, furnishings, lending, retail, and other services – account for roughly 12% of gross domestic product. Housing, more than any market segment, has pushed the economy forward over the past five years. Given the trend of younger first-time buyers entering the market, we expect housing to remain the lead engine on the economic train.

That more millenials are finally embracing homeownership is no surprise (though we expected the trend to take hold sooner than later). Despite the surfeit of reports expounding the benefits of renting, owning imparts important psychic benefits renting can’t match. Knowing that you can paint a wall, decorate a room, or hang a picture to your liking without defending your actions is what makes a house a home, and you can really only have home if you own the house.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

Much has been made about the rising level of student-loan debt. Today, outstanding student-loan debt stands at nearly $1.3 trillion. It’s natural to conclude that high student-loan debt correlates with the falling homeownership trend among millennials.

But perhaps the conclusion is unwarranted. Data gathered by Freddie Mac are inconclusive, and we’re not terribly surprised.

Student-loan debt and students aren’t homogeneous blobs. The absolute amount of the student-loan debt matters only in relationship to what the debt funded. A student who accumulates $100,000 in student loans and graduates with a highly desirable bachelors degree in mechanical engineering will likely hit the ground running. The opportunity for high-paying employment the mechanical engineering degree produced was well worth the $100,000 in student-loan debt. The $100,000 was, therefore, a legitimate investment: It produced higher annual cash flow.

On the other hand, if the same $100,000 funded a degree that would raise annual cash flow only minimally (or not at all), then the $100,000 wouldn’t be an investment. In this case, the $100,000 really funded current consumption, which is rarely a good use of debt.

The good news is that Freddie Mac has found that many millennials are using debt properly – to invest in degrees that raise annual cash flow. Freddie Mac found a 61% probability someone with a bachelors degree will own a home compared with 30% for someone with no degree. Better yet, Freddie Mac finds that educated young people, millenials in particular, still desire to own a home.

Freddie Mac’s findings are yet another reason we don’t fret about today’s low homeownership rate. To the contrary, we view it as pent up demand that will lead to higher future sales.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

The employment data for September were released last Friday. The numbers were of the shoulder-shrug variety.

Payrolls increased by 156,000 for the month, considerably lower than the 200,000-or-more monthly gains that we had seen earlier in the year. As for the unemployment rate, it actually increased, drifting up to 5% from 4.9%. Few economists were alarmed, though. The unemployment rate rose because more discouraged workers sought employment. (Discouraged workers aren’t counted in the official unemployment tally.)

The September employment numbers should have been much ado about nothing, except they weren’t. The numbers were just good enough to convince financial markets that it’s “game on” – an interest-rate increase is on the way.

The yield on the 10-year U.S. Treasury note rose to 1.8%, the highest it has been since mid-June. The 10-year note, in turn, leads long-term mortgage rates. The 30-year fixed-rate loan continues to move higher. Depending on the day, a quote of 3.5% on the 30-year loan can still be found. But more often, 3.625% is likely for a top-tier conventional loan.

Election Day is Nov. 8; Federal Reserve officials meet again on Nov. 2. We’d be shocked if the Nov. 2 meeting produced an interest-rate increase. Most people concur with us. Traders in federal funds rate futures contracts are betting only an 11% chance of a rate increase at the next meeting. As for December, that’s a different story. These same traders are betting a 70% chance a rate increase will occur then.

With more market participants anticipating a rate increase, it’s only natural that rates would rise ahead of the blessed event. Markets are forward-looking entities. Changes in the perception of what the future holds moves market prices, including interest rates.

Of course, we’ve been down this road before. Last year around this time, mortgage rates began to drift higher as the market priced in a rate increase for December. But once the rate increase was announced, mortgage rates plateaued and then drifted lower through the first half of 2016. Those lows held until a few weeks ago.

As Mark Twain observed, history doesn’t repeat, but it frequently rhymes. Should the Fed raise the federal funds rate in December, the increase will likely be no more than 25 basis points – the same increase as last year. (As a percentage, this next increase will actually be less than last year’s increase. The Fed doubled the fed funds rate last year; this next increase, it will increase it by half.)

Given sluggish global economic growth, 25 basis points might be all we see until December 2017. And if history really does rhyme, we could see mortgage rates drift lower again. That means a 3.25% quote on a conventional 30-year loan could again be in the cards for mid-2017.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

CalculatedRiskBlog.com posted an interesting statement by an Oregon government economist on housing this week. The economist explained the shift to renting away from buying that has occurred over the past decade. His analysis focused on household finances, demography, and preferences – all of which have supported renter-market growth in recent years. (Homeownership is at a multi-decade low.)

This same economist also said that new data point to a change. It appears that the pendulum could swing back to ownership, and it could swing back sooner than conventional opinion expects.

A drop-off in renting momentum is one reason. The number of renters ticked up 0.1% nationwide last year. That’s still a gain for renting, but the year-over-year change was minimal compared to previous years. Renting momentum has slowed considerably. This could indicate that 2015 was the peak year for renting. What’s more, demography would support that contention.

The 30-to-39 age group is an important home-buying group. This age group will increase significantly over the next 10 years. Just as important, this group is growing in affluence. More of them have gained the financial wherewithal to buy a home. Just as important, they want to buy a home. Surveys from Fannie Mae, Freddie Mac, and other sources continually show that the vast majority of people, including those populating the younger generations, aspire to own a home.

With this data in mind, we see no reason housing sales and single-family construction shouldn’t continue to trend higher in the coming years.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

Last week, we presented a minor lament on the difficulty in forecasting interest rates. Then, of course, we offered a forecast: We didn’t believe that the Federal Reserve would raise the federal funds rate – the base rate for most other interest rates – no sooner than December, if not later.

We also implied there was a good chance that mortgage rates would hang low for a while. That is, they would hang in the same low, tight range that reigned through most of August (when quotes on best-execution 30-year loans were bound between 3.375% and 3.5%). As we write, we’re more likely to see best-execution quotes of 3.5% or above.

It’s no surprise that mortgage rates moved higher; many debt-security yields expanded this week, most notably the yield on the 10-year U.S. Treasury note. As you may know, the 10-year note holds significant sway over mortgage-backed securities, which hold significant sway over mortgage rates (long-term rates in particular).

The yield on the 10-year U.S. Treasury note spiked 10 basis points on Tuesday after Richmond Federal Reserve Bank President Jeffrey Lacker added his support for raising the fed funds rate sooner than later. The pro-interest-rate-hike contingent of Fed officials is growing. Several regional Fed bank presidents (like Lacker) now believe that implementing a series of small interest-rate increases would be good for the economy, even if the economy continues to post sub-standard growth. (By the way, Fed Chair Janet Yellen isn’t one of the supporters.)

A rate hike this December appears more likely this week than last week. Traders in fed funds rate futures contracts now are betting a 64% chance a rate increase will occur in December. (Some are even betting there’s a chance for a rate increase in early November at the next Fed meeting.)

This is all rather new in the annals of the Federal Reserve’s 113-year history. That is, Fed officials publicly guiding markets on interest-rate policy.

Before the 2008 financial crisis, Fed officials were a reticent lot. There was little foreshadowing that a rate increase or decrease would occur or what the amount would be (though you could glean what Fed officials could do by vetting the same data they vet.) In the good ole days, before the 2008 financial crisis, Fed officials were mostly supporting players on the financial stage. Today, they’re lead actors: Any utterance by a Fed official produces a meaningful swing in interest rates.

Accurately forecasting mortgage rates is a difficult enough proposition. It’s all the more difficult when a Fed official can change the outlook with an off-hand remark to the media. How often over the past three years has a Fed official hinted that a rate increase was imminent only to see the rate increase postponed? More than we can count.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

There are multiple answers, of course, but we have one in mind: predict the direction of interest rates. The difficulty is clearly explicated in the definitive interest-rate exegesis A History of Interest Rates by Sidney Homer and Eugene Sylla. Vetting reams of economic data apparently offer no more insight to the direction of interest rates today than the tossing of chicken bones on the floor did in 1,000 BC.

Just last month, interest-rate-increase chatter was rising in both pitch and volume. Traders were betting as high as 25% odds that Federal Reserve officials would raise interest rates at their September meeting. They were giving 60% odds that rates would be higher by the end of December. After all, more Fed officials have publicly opined that interest rates need to rise.

But here we are heading into October and the yield on the 10-year U.S. Treasury note is down roughly 10 basis points in the past week. Quotes on many mortgage products are down as well. Indeed, mortgage rates are back down to the tight, low range that prevailed through most of August. Traders now give no better than 50/50 odds that we’ll see a rate increase by the end of December.

At the beginning of the year, the “smart” money (which we weren’t a party to) was betting two, if not more, interest-rate increases would occur before Dec. 31. At the risk of sounding annoyingly boastful, we were skeptical that any rate increases were imminent. One increase might come, but at the last moment, but no more. As we head into the home stretch, even one increase might be too many, especially after the International Monetary Fund recently lowered its global-growth forecast and the World Trade Organization recently lowered its global-trade forecast for 2017.

The conventional thought is that the Fed has to raise interest rates sometime. But that doesn’t mean that “sometime” must be sooner than later, or that later need not reside in the distant future.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

We thought that new-home sales would post a bit higher than they did. After all, home-builder sentiment has been on the rise and is at a multi-year high. What’s more, July saw a 12.4% surge in new-home sales to 654,000 units on an annualized rate.

Unfortunately, the momentum proved unsustainable, at least for August. New-home sales posted at 609,000 units on an annualized rate for the month. This is obviously quite a bit lower than July’s sales, and quite a bit lower than our expectations.

But taking a glass-half-full view, we see that August sales really aren’t all the disappointing, because the long-term trend remains up. Year over year, new-home sales are up 20.6%. Year to date, sales are up 13.3% compared to the same year-ago period.

New-home buyers are at least seeing more affordability. Prices have fallen in recent months, which points to builder discounting. The median price, at $284,000, is down 3.1% on the month and down 5.4% on the year. In addition to discounting, there are signs that more lower-priced new homes are hitting the market. This is an obvious positive for drawing more younger first-time buyers into the market.

Housing – new-housing activity, in particular – has been the one persistent and dependable growth engine in the U.S. economy. Paradoxically, housing’s strength could be another reason the Federal Reserve continues to postpone an interest-rate increase. The Fed doesn’t want to risk stalling the one engine that’s firing on all cylinders. Then again, if the U.S. economy is as strong as some of the Fed officials believe, then the housing engine should be able to endure higher interest rates without stalling.

As for the economy, it’s growing, but hardly at a gangbuster pace. Second-quarter gross domestic product (GDP) was revised up this week to 1.4% on an annualized rate. From a historical perspective, 1.4% annual growth is just “okay.” The good news is that the economy saw an uptick in nonresidential investment and consumer spending. Whether that’s enough to turn Fed sentiment more hawkish on interest rates remains to be seen.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.

No one was surprised, really. The Federal Reserve again postponed an increase in the federal funds rate on Wednesday. The range remains at 0.25%-to-0.50%, where it has been all year.

Interest rates didn’t move much on the Fed announcement, because the announcement was anticipated. The yield on the 10-year U.S. Treasury note held near a recently established higher range at around 1.65%. Mortgage rates held much the same. Quotes around 3.5% on a 30-year fixed-rated conventional loan have been the norm since early last week.

A few eyebrows were raised because three of the 12 Fed officials voted to raise the fed funds rate. This is the highest number since Dec. 2014. That aside, it was really more of the same: The Fed postponed an interest-rate increase, and it followed up its decision to postpone a rate increased with the usual noncommittal, vague language. To wit: “Near-term risks to the economic outlook appear roughly balanced.” What are near-term risks and how do we know if they are roughly balanced? Your guess is as good as ours.

December looks like the next opportunity for a rate increase. At the beginning of the year, we predicted that any rate increase would be unlikely to occur until December. So far, we’re batting a thousand.

Then again, we wouldn’t be surprised if December produces another postponement. The U.S. economy continues to limp along. Sub-2% annualized GDP remains the norm. What’s more, central banks around the world continue to implement loose-money policies. If the Fed applies a tightening monetary policy while other central banks continue to loosen (namely the Bank of Japan and the Bank of England) this will only amplify any Fed action: A strong dollar becomes even stronger; a sell-off in risky assets becomes more intense.

Today, traders in fed funds rate futures contracts are offering 58% odds of a rate increase at the Fed’s December meeting. Don’t be surprised if those odds drop as December nears.

When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

As a local area expert with knowledge of Harrisburg PA area communities, Don’s objective is to work diligently to assist you in meeting your real estate goals.

If you are considering buying or selling a home or would just like to have additional information about real estate in your area, please don't hesitate to call me at (717) 657-8700, complete my online form, or e-mail me at don@donroth.com.